- The Convener:
The second item on our agenda is further evidence taking on the financial implications of the single status agreement. We have with us representatives of trade unions that are involved in the negotiations. I welcome Carol Judge from Unison and Jimmy Farrelly from T & G Scotland. We are expecting Alex McLuckie from the GMB; when he arrives, we will sit him next to you. Given that we expect to hear from a GMB representative, I should declare that I am a GMB member. Other committee members may wish to declare their trade union membership.
- Dr Murray:
I am a member of T & G Scotland.
- Mr Frank McAveety (Glasgow Shettleston) (Lab):
I have links with the T & G as a sponsored member.
- The Convener:
Now that we have sorted out all the formalities, I ask the union representatives to make a short opening statement before we ask questions. We have received your written submissions, so please do not read them out.
- Carol A Judge (Unison Scotland):
We have presented the committee with a lot of detailed information in our two submissions, so we do not intend to make a grand opening statement. Along with our counterparts, the employers and the Convention of Scottish Local Authorities, we are extremely concerned about the huge cost that local authorities will face in meeting their legal obligations to address equal pay. We welcome the opportunity to discuss the issue with the committee. Rather than go into detail in an opening statement, we would prefer to respond to questions or to elaborate on points in our submissions.
- The Convener:
Do you have anything to add, Jimmy?
- Jimmy Farrelly (T & G Scotland):
My position is similar.
- The Convener:
Okay. Let us move on to questioning.
- Derek Brownlee (South of Scotland) (Con):
I want to clarify what Unison Scotland says in its submission. On page 4 it states that, in spite of your disagreements with the employers, you agree that
"the scale of equal pay liability could not have been foreseen … in 1999."
The foot of the second paragraph on page 7 says that
"the ability of local government employers and trade unions to accurately project the costs of equal pay"
in 1999 were seriously undermined because the Department of Employment had not implemented equal pay law correctly. I do not understand how you can make both those statements when, at the top of page 7, you say:
"It is UNISON's position that it was manifestly obvious … in 1993 that the arbitrary limits on compensation … were incompatible with community law."
That does not seem to be consistent.
- Carol A Judge:
I am not sure that I fully understand your point. Basically, the position is that in 1999 agreement was reached on the need to address equal pay.
Jimmy Farrelly and I are here as negotiators, rather than as legally qualified people. I do not have direct experience of local government, but I do have experience of working with other major employers in Scotland in trying to address issues so that equal pay can be introduced. That is usually done through a job evaluation scheme, which always costs money. I have never been involved in a scheme where that was not the case.
In 1999, we had to identify areas where people—mainly women—were graded lower, and decide how they could be appropriately graded. There was a cost attached to that. There was also the issue of whether those people should be compensated for the years before that, when the low-pay regime was in force. Since then, there have been a number of changes, which nobody could have predicted in 1999. Our paper tries to demonstrate for the committee's benefit where those changes have taken place. In 1999, it was a question of teasing out the matter with employers, so that they could understand what the liability was. Realistically, however, whether there is liability or not—and there was—it is a question of employers having to meet their legal obligations by introducing equal pay.
- Derek Brownlee:
I appreciate the point about meeting legal obligations. What I was trying to establish was the sort of information that was available in 1999 about the cost implications of those obligations. Some of the arguments that we have heard contend that, because the cost was not ascertained in 1999, it is now difficult for employers to pick up that cost. The Unison submission confused me because, on the one hand, it says
"that it was manifestly obvious to the Department of Employment at the time of the review in 1993"
that the obligations under the European directive had not been transposed into United Kingdom law but, on the other hand, it says that that was not obvious in 1999. You cannot have it both ways: either it was "manifestly obvious" in 1993 that appropriate legislation had not been fully incorporated into UK law or it was not.
- Carol A Judge:
I cannot comment on what happened in 1999, because I was not directly involved. Jimmy Farrelly might have some more information, but my experience is that few employers can predict that cost. What was obvious, however, was that employers had a legal responsibility to introduce equal pay, and the 1999 agreement was the method by which that was introduced for local government in Scotland. Employers had to be aware of many issues up until that point, and have had to take account of everything that has happened since. Jimmy Farrelly will be able to expand on that.
- Jimmy Farrelly:
In 1998, Scottish employers sought to have their own national bargaining structure. That did not come from T & G Scotland; it came from the employers. The agreement was finalised in 1999, but no sooner had that happened than we found ourselves in a major dispute in 2000, and it was the early spring of 2001 before it was resolved. We then ran into difficulties, because our members at local level were seeking information from employers, but that information was not forthcoming. At that stage, we were pressing for the job evaluation scheme that had been agreed nationally—it took a long time to get that national agreement—and there was a whole host of problems with the software that was being used.
In late 2002, we started getting involved in firm debates about how we were going to progress, and at that stage the fact that litigation was a possibility became known to the employers, which led to a lot more discussion. We had advised the employers and were keen to move the job evaluation process forward but, unfortunately, for a whole host of reasons, it did not happen. Now there is a funding crisis, and people are asking who could have predicted it.
It is for other people to sit back, wait until the dust has settled and say who did what and what the exact situation was at any particular time, but we were keen to move the process on. We agreed a national job evaluation scheme, but it must be recognised that the 32 different employers do not have to use the national scheme that we agreed.
We took considerable time to have the scheme equality proofed by the Equal Opportunities Commission. We spent a lot of time with the EOC to try to ensure that the scheme would protect our members by delivering equality in pay, as well as protect employers from litigation.
Unfortunately, the scheme was not addressed as quickly as it should have been, responsibility for which lies with the employers.
- Derek Brownlee:
It would be useful to have clarification of your position on one point. The Unison submission was good in drawing out some of the arguments. For example, on page 5 it says:
"equal pay liability is 250% larger than could have been forecast by the most detailed analysis in 1999 and this increase in liability is attributable to the failure of the UK Government to legislate on equal pay in compliance with the provisions of community law."
That relates specifically to the two-year period, which was subsequently removed from the legislation. It strikes me as inconsistent to say that the most detailed analysis in 1999 could not have foreseen that situation, and that it was manifestly obvious back in 1993 that the arbitrary limits of compensation were incompatible with Community law.
- Carol A Judge:
As a negotiator, I am faced with changes. That means that when we reach the stage of trying to implement equal pay status with an employer—in this case, local authorities in Scotland—we look to introduce arrangements to compensate for past discrimination from up to two years ago. That has changed to five years.
- Derek Brownlee:
But is not the Unison argument that it was manifestly obvious back in 1993 that the two-year limit was incompatible with Community law? On that basis, should not it have been anticipated that the potential costs of any settlement would have to include more than two years' back pay?
- Carol A Judge:
I have never been in a position with an employer where we could predict changes to case law and legislation. Had I been involved in negotiations in 1999, I would not have been in a position to say, "What happens if we change?" What we have is a change—
- Derek Brownlee:
So it was not manifestly obvious in 1993 that the two-year time limit was incompatible with Community law.
- Carol A Judge:
Realistically, it was, but—
- Derek Brownlee:
This is what I do not understand: how can you say that part of the problem is the extension of the time limit to five years from two and that you could not have foreseen it, and that back in 1993 it was manifestly obvious that the two-year time limit was incompatible with Community law? I do not see how the two statements can be true simultaneously.
- The Convener:
Perhaps it would be better to simply ask you some questions about how we reached the current point and then we can make progress. Indulge me a little and give me an indication of how we got to here. As I understand it, you arrived at an agreement with the employers in 1999 that single status would be implemented. Is that correct?
- Carol A Judge:
Yes.
- The Convener:
You then sought to negotiate the substance of what single status agreements would mean on a Scotland-wide basis.
- Carol A Judge:
No, employer by employer. It was left to each local authority to negotiate with its recognised trade unions what single status agreements would be reached and, therefore, to harmonise terms and conditions. We have a model job evaluation scheme. Each local authority is entitled to adopt a different scheme if it so wishes, but we have a recommended model, so there is a lot of guidance and understanding at a national level about how to implement the agreements at local level.
- The Convener:
Did both the employers and trade unions agree that local agreements, rather than a national agreement, were the best route towards single status?
- Jimmy Farrelly:
We inherited the agreement that was struck in 1999. The employers took the view that they would prefer local determination to take account of a list of factors. We would have preferred a national deal to apply right across the board, so that there would be no misunderstanding about what people were entitled to. The agreement covered core terms and conditions; other elements could be negotiated locally, including whether the employer took on the job evaluation scheme that was agreed nationally. We believed that it was in employers' interests to do so. The scheme was equality proofed and a lot of time and effort went into agreeing it.
- The Convener:
I want to clarify that. You are saying that the agreement that was reached in 1999 was flexible in the sense that each authority reached individual agreements. Your instinctive preference was for a national agreement, but it was the employers' wish that the agreement should be flexible and that arrangements should be made authority by authority.
- Jimmy Farrelly:
Yes.
- The Convener:
You have covered this to an extent, but I would like a bit more definition. As I understand it, there were to be national negotiations about a core framework for the agreement, around which local negotiations were to take place. Is that right?
- Jimmy Farrelly:
In essence, yes.
- Mr Swinney:
Were any parts of the national agreement mandatory for all local agreements?
- Jimmy Farrelly:
Yes. The parts on pay, hours of work and so on were mandatory.
- Mr Swinney:
What exactly were those components?
- Jimmy Farrelly:
Everybody was on a 37-hour week from 2002. Prior to that, manual workers had been on a 39-hour week and administrative, professional, technical and clerical workers were on a 35-hour week. The hours were harmonised. The hourly rate was also negotiated nationally.
- Carol A Judge:
Deadlines for implementing equal pay were also agreed at a Scottish level. There was an agreement that all local authorities should come into line by certain dates.
- The Convener:
What were the dates?
- Carol A Judge:
They have moved. Jimmy Farrelly said at the beginning of his contribution that, with agreement at Scottish level, we have put back the implementation date, which should be March of this year.
- The Convener:
Can you tell us what the initial dates were, so that we get a sense of what movement has taken place?
- Jimmy Farrelly:
The initial date for implementation of the job evaluation scheme was April 2002. By agreement, that was extended to April 2004. We had difficulty agreeing that, because many of our delegates and union members were not happy about the delays in the scheme.
- Mr Swinney:
Implementation was delayed from April 2002 until April 2004. Was that at the request of the employers?
- Jimmy Farrelly:
Yes.
- Mr Swinney:
Was it against the will of the trade unions?
- Jimmy Farrelly:
We reluctantly agreed to extend the deadline, because the employers argued that there was no way in which they could implement the job evaluation scheme by 2002, given the technical work that had to be done. A host of issues were involved, including issues arising from the software.
- The Convener:
You reached an agreement in 1999, with a target for implementation of April 2002.
- Jimmy Farrelly:
Yes.
- The Convener:
How many of the issues that needed to be resolved to implement the scheme in 2002 were resolved in time for 2002? Were any of them solved, or a percentage of them? Where were you by 2002?
- Jimmy Farrelly:
By early 2003, we had set up three different working groups to try to break the logjam. At the local level, all sorts of problems were arising. People were saying that the scheme had to be delivered at no cost to the employers. The trade unions were advised of that around the end of 2002. As negotiators, we know fine well that there will be an additional cost when a job evaluation scheme is introduced. In effect, we were being told, "We will introduce the job evaluation scheme without any cost and, if anybody gains, it will be to somebody else's detriment." Obviously, that created tensions and difficulties at the local level.
- The Convener:
Was that not envisaged when you reached the single status agreement? In my time in local government, before the agreement was reached, there was recognition on all sides that there would be gainers and losers. In that context, how credible is it to say that employers intimated what you suggest only in 2003? It was obvious to everyone before the agreement was signed.
- Carol A Judge:
I was not directly involved at that time. Realistically, we acknowledge that there will be people who will lose, as you put it. However, the negotiating challenge is to consider how their salary can be protected in some shape or form while ensuring that the idea of equal pay is still intact in the agreement. When faced with implementing the agreement, it would have been impossible for the package to have no cost. There is no way that any employer who was faced with the legal responsibility of introducing equal pay through a job evaluation scheme could expect to do so at nil cost. The losers are not only those whose jobs are revealed to have been graded higher than they should have been but all of the people who should have gained as a result of a recognition of the need for equal pay but who are told that they are not going to get anything at all. That is a significant departure from what you would expect the position to be several years after an agreement has been negotiated.
- The Convener:
Obviously, we have moved from a situation in which there was an implication that the agreement could be implemented at a relatively marginal cost, even if it would not be at no cost, to a situation in which local authorities estimate that the cost of dealing with the retrospective elements of the agreement will be more than £500 million. That is a significant road to travel down. We want to find out how we got into that situation.
I welcome Alex McLuckie of the GMB, who has just joined us.
In the period leading up to 1999, there was a long process of reaching an in-principle agreement on single status. That agreement envisaged that there would be local negotiations to implement the process but also that there would be harmonisation across local authorities in key areas that you have identified, such as pay and hours. That was all to be put in place by April 2002. However, you are telling us that there was little progress on that by 2002. Is that correct?
- Carol A Judge:
Yes.
- The Convener:
Last week, Pat Watters of the Convention of Scottish Local Authorities told us that a subsequent target date of April 2004 was set. What happened between 2002, when little progress had been made, and April 2004?
- Carol A Judge:
Again, I was not directly involved in that. My colleagues might be better placed to respond to the question.
- Alex McLuckie (GMB Scotland):
I apologise for being late. I am sorry if I go over some things that have already been discussed.
The idea of the single status agreement was to do away with the artificial divide between blue and white-collar employees. To do that, it was agreed that we had to examine the two separate pay structures. How could we do away with the divide unless we had a common pay structure for all employees? The means by which the single status agreement sought to achieve that was a job evaluation exercise that would examine all local government jobs and place them in a wage structure according to the skills that they required.
The delay in 2002 occurred because we had not developed a job evaluation scheme that was fit for purpose. We had to agree to extend the date because the job evaluation scheme was not ready. From the trade unions' point of view, the difficulty with the second date was that we were pressing employers to implement the job evaluation scheme, which had been negotiated by the trade unions and the employers, but there seemed to be resistance from them. Despite our best efforts to get them to implement the job evaluation scheme, that did not happen.
- The Convener:
Was the job evaluation scheme in place between 2002 and 2004? When was it agreed?
- Alex McLuckie:
I think that it was probably agreed in time for the first implementation date. The difficulty that we had—and the reason why we agreed to the extension—is that, because of the number of jobs that had to be evaluated, there was not enough time to carry out a proper job evaluation exercise. Part of the delay was to allow proper consultation with the trade unions and the proper implementation of the job evaluation scheme. We had probably signed off the job evaluation scheme by the first date, but the difficulty was that the time between signing it off and the implementation date was too short. There was a debate about the fact that we needed a bit more time to do things properly.
- The Convener:
So, from your point of view, two years was not a sufficient time in which to deal with the negotiations that were required to implement the job evaluation scheme. That is the basis of the delay and the reason why the April 2004 target was not met.
- Alex McLuckie:
We did not have two years. We signed off the agreement in 1999 and we then got involved in discussions on the job evaluation scheme. I think that the first date was 2002.
- The Convener:
Yes.
- Alex McLuckie:
It might have been 2001 or the start of 2002 when we signed off the job evaluation scheme, but the number of jobs that were to be covered by the new scheme was significant. The employers said, "We're not going to meet that date. The job will be part finished. We need more time to ensure that all the jobs are evaluated and that the pay structure and pay model are sorted out." They needed more time. That is why the trade unions agreed to a later date for the full implementation of the job evaluation scheme.
- The Convener:
If I understand correctly, the date that you agreed was April 2004.
- Alex McLuckie:
Yes.
- The Convener:
What further progress had been made by April 2004?
- Alex McLuckie:
In terms of negotiations or in terms of implementation?
- The Convener:
In terms of implementation.
- Alex McLuckie:
Nothing. One council implemented a job evaluation scheme.
- The Convener:
Which council was that?
- Alex McLuckie:
It was South Lanarkshire Council. For whatever reason, the other councils failed to move, despite our best efforts. Every time we met employers, we said to them, "Look, we've got to get this job evaluation scheme in place." One of the biggest pieces of the jigsaw that was missing was the job evaluation scheme, which was crucial in delivering the single status that we were looking for. At every meeting we had with employers, we said, "Look, we need to move this job evaluation agenda on."
As you rightly said, the single status agreement was split in two: there were core terms and conditions of employment that were negotiated at a national level; and then there were other terms and conditions of employment that could be negotiated locally with the recognised trade unions. The job evaluation scheme fell into the second category. There were to be 32 sets of negotiations on it within COSLA—32 implementation plans, as it were.
- The Convener:
So, for whatever reason, the decision was that it would be better to have 32 separate negotiating agreements than to have a single negotiating agreement.
- Alex McLuckie:
That was the employers' view; it was not the view of the trade unions.
- The Convener:
No, I just want to be clear. The agreement was to proceed on the basis of having a single set of core agreements covering all the authorities, with flexibility around that. That in-principle agreement was in place before 2002, but between 2002 and 2004 only one local authority implemented a local agreement that was based on that framework. Is that an accurate summary?
- Carol A Judge:
Yes.
- The Convener:
Let us roll forward to now. How many other authorities have negotiated single status agreements with the trade unions?
- Carol A Judge:
To my knowledge, no other local authority has one, although several are close to completing that work. Last year, all the momentum that was building among authorities that were willing to complete the agreement and job evaluation and to introduce single status agreements was diverted when we put energy into trying to reach a Scottish framework agreement on compensation for past discrimination. The picture that I have—my colleagues can give their own views—is that the authorities were waiting to see the outcome of that. That stalled some of the work at the local level, although it was continuing. Even last year, several local authorities were still deciding which job evaluation scheme to use. That contributed to a significant delay in moving the matter forward.
The situation varies among local authorities in Scotland, some of which are advanced in dealing with job evaluation and single status, although I have in my files only one that is ready to go through our internal vetting process. Another one got close last year, but it has run into some stumbling blocks. I am promised that several authorities are close. However, since about August last year, most councils have put their energy into dealing with the priority issue of compensation for back pay, expecting that a framework would be made available at the Scottish level, which it has not been possible to do. That has culminated in our being with you today. We want to explore with you the huge cost of dealing with that element—which is only one element—of introducing equal pay within local authority employers.
- The Convener:
I do not doubt that we will want to address the equal pay issue in depth and detail, but let us be clear about the single status aspect of it. The information that we have got up to now—from you and from the employers—is that the agreement was reached in 1999, following a considerable negotiation, and that, seven years on, only one authority has implemented the scheme, although you say that other authorities are close to some kind of agreement.
Bearing in mind what you have said about such schemes rarely being entirely cost neutral, I presume that the costs of single status cannot be anticipated until we are a bit clearer about how other such schemes have been put in place. Is that a fair summary?
- Carol A Judge:
Our problem is that we cannot cost it. We do not have the volume of information that would allow us to discuss matters with the committee today. However, your assessment is correct: a specific figure cannot be arrived at until all the job evaluation schemes are completed and we understand what the costs will be, council by council, although we can recognise that there will be costs. Given the changes that have taken place in relation to equal pay and back pay, there will be significantly higher costs than might have been expected when employers started to identify what the potential costs would be. Costs have increased.
I cannot share our council-by-council analysis with members because council-by-council detail is not yet available to enable predictions to be made. However, we can give a ball-park figure and, as members might expect us to say, we feel that employers' expected costs are on the low side and do not anticipate the full costs of not only back pay, but the implementation of equal pay, equal value across the workforce and job evaluation, which, although it is not necessarily a male-female equal pay issue, is to do with jobs that have been underpaid for a number of years.
- Mr Swinney:
If I picked up correctly what you said to the convener a moment ago, the concept of a national agreement is back on the table again. Is that what you said?
- Carol A Judge:
In August, we were invited back to explore whether we could introduce a framework discussion, or guidance. We were reluctant to use the word "agreement" because things would not be binding on all councils on the employers' side. The employers wanted an enabling framework that the unions supported so that guidance and direction could be given on how to deal with compensation for past discrimination, as that issue had come on to the radar.
- Mr Swinney:
So the issue was past discrimination rather than single status. Okay.
- Carol A Judge:
The only issue was that element, rather than the wider introduction of equal pay.
- Mr Swinney:
The convener has gone through in detail what happened between 1999 and 2002, 2002 and 2004 and 2004 and 2006, but I am interested in how regular the dialogue was and how active people were. Did you have monthly meetings with the employers, or would six months go by in which there were no discussions? How would you characterise the different periods?
- Carol A Judge:
I will let others comment on that because I was not directly involved, but we have had numerous meetings since August.
- Mr Swinney:
I am sure that you have had regular meetings since August, but I am more interested in the tranches before then. Did you have regular, monthly discussions to try to reach a conclusion, or was the matter left for months without there being any dialogue, so that we have suddenly been left with a sprint to reach the finishing line?
- Jimmy Farrelly:
I mentioned that we set up and tasked groups in early 2003. We got delegates involved with employers to try to break the logjam. Three groups were involved—a modernisation group, a group that considered only bonuses and an equalities group. Those groups were due to report back to the national set-up, but we had exactly the problem that has been described. We did not receive the regular employer responses that we wanted.
I must make our frustrations clear. In February or March last year, we had a meeting in Crieff to which all the employers were invited, but we were lucky if half a dozen to a dozen employers turned up. The root of our frustration is the fact that we do not have a binding national agreement. The fact that local authorities were left to negotiate their own version meant that the credibility of the national process was damaged over a lengthy period. That was very frustrating for the trade unions and we made that point continuously. The difficulty in such a situation is that no matter how many meetings there are, the question is what difference that will make to the outcome. That is where our frustration lay.
- Mr Swinney:
You said that the number of hours that individuals would work was fixed and mandatory and applied to all local authorities, and that the hourly rate was mandatory and fixed for all local authorities. What are they all fighting about then? If the number of hours and the hourly rate are fixed, what is the big fight about? Why are the local authorities unable to do a deal with you? What are the other issues?
- Alex McLuckie:
It is not usually our role to respond for COSLA on the employers' side, but we will try. I apologise if I missed the discussion on this earlier, but the single status agreement was born out of councils' desire to do their own thing, to move away from national agreements and to have local flexibility to deal with what they described as a local marketplace. There was a feeling that the Ayrshire councils, for example, might have a different marketplace from Aberdeen City Council and Aberdeenshire Council. That is the employers' answer.
- Mr Swinney:
I am not trying to be difficult; I genuinely cannot understand this. If you have sorted out how many hours a week people are going to work and what the hourly rate will be, what is the debate about? Is it about travel costs? Is it about what colour of jacket people wear to work?
- Alex McLuckie:
I understand your question and perhaps I can answer it now, from the employers' point of view. I should state that the trade unions' position has always been that there should be a national job evaluation scheme, which would apply to all councils. It would make no difference whether someone was a home carer in Glasgow or Edinburgh—they would be paid the same. If someone was a refuse collector in Argyll and Bute or in Dumfries and Galloway, they would be paid the same. That has always been our view. The health service has managed to do it, and we say that local government could have managed it. To get back to your question—
- Mr Swinney:
I will stop you there before you answer my question. If the national framework says that someone should work 37 hours and there is an hourly rate throughout the country, is not it the case that a dustbin collector—
- Alex McLuckie:
No. That is the difference. All that we have negotiated nationally is a pay spine, which may have 120 points on it. Spinal column point 1 is £5.53; if we negotiate that to £6, it moves to £6. You will perhaps understand my earlier statement when I give this explanation. The local element of the single status agreement is the job evaluation, which merely rates jobs in terms of value. It is a league table, and within the job evaluation scheme there are top scores and bottom scores.
We have a saying: "Points make prizes." Depending on the number of points that a group of employees has, they will move across to a particular part of the pay spine. The local authority and the local trade unions will negotiate exactly where they should go. The money in the boxes is negotiated nationally, but local decisions can mean that a home carer is at spinal column point 12 in East Ayrshire and spinal column point 10 in North Ayrshire.
- Mr Swinney:
I totally understand now. Thank you.
- Alex McLuckie:
I am not sure that we do.
- Mr Swinney:
I am not sure that we have advanced much since 1999.
- The Convener:
We asked how many agreements had been reached and you said one, in South Lanarkshire. How many agreements have been reached on local job evaluation schemes?
- Carol A Judge:
I would give you the same answer—one. We want the single status agreement and job evaluation to come together, and we want some kind of arrangement on compensation for past discrimination. On my desk, I have only one agreement—other than the one that the committee has heard about—that is ready to go through our internal process.
- The Convener:
Is not it strange that people want to settle deals on equal pay when they have not agreed on the job evaluation scheme?
- Carol A Judge:
No, because the priorities have shifted since last summer. We would prefer everything to be done at the same time. The way to introduce fair and equal pay and to compensate anybody who has been inappropriately paid for a number of years is to deal with both matters in one package. We are seeking legal advice, guidance and direction on whether it is realistic for us to deal with cases in advance of the completion of job evaluation. However, we are under significant pressure—collectively and individually, from the employers and from our members—to address the issue. I acknowledge that employers would want to speak to us in order to reach an accommodation at local level.
The jobs of home carers are not necessarily the same in different local authorities, so they may be graded differently as a result of job evaluation, or they may be valued differently against other workers. The case for equal pay will vary from place to place.
We have to address equal pay sooner rather than later. That is long overdue, and I am sure that the committee will give us a chance to explore that on behalf of the trade unions. If equal pay is introduced, we will have to consider the costs. Whether equal pay dates from last year, this year or next year, the legal obligations of equal pay will cost local authorities—35 years after the legislation.
- The Convener:
I understand your view, although on page 3 of your submission you say:
"The Equal Pay Act is based on levelling up, not levelling down."
I do not think that the act points in either direction; it just says that there should be equal pay, without saying what the mechanism is.
Earlier in the same paragraph, you say:
"Once jobs are evaluated, employers and trade unions use that data to negotiate around pay and grading models that offer women and men equal rewards. What tends to happen is that pay freezes or red-circling are used to hold back the pay of one group while those previously undervalued and underpaid catch up."
Is it plausible to suggest that you will reach agreement on equal pay without having agreed on job evaluation?
- Carol A Judge:
It is not possible to deal with equal pay without having some measure of the context; decisions have to stand up to examination. We have always been advised to introduce an equality-proofed job-evaluation based way of measuring jobs so that employees can see whether their job has been properly graded according to equal value and whether there are any pay differences.
As far as the employers are concerned, there is a clearly defined high-risk group of men and women manual workers who have different rates of pay because of bonuses. My colleagues here are better versed in, and have more detail about, that situation. There is nothing to prevent employers from doing what they want to do—which is to address that issue in advance of completing job evaluation—because they have already identified an element of pay difference in that there are low-paid female workers who have not had access to bonus schemes. Those women are graded the same as the male workers, but have a different pay package.
Employers can look back over the previous five years—the current requirement—assess what the female workers should have been paid for that period and offer them compensation for that. We could not reach an accommodation at Scotland level on the wording for dealing with that. Employers want to deal with that at their local level in advance of completing job evaluation schemes. We are seeking further legal advice on whether we can technically go ahead and complete such local arrangements.
Our tracking over the years has clearly identified that area as one that we would have to go back to and fix. We have had on our radar a number of areas that will have to be addressed. Many councils have costed what it will take to cover compensation for high-risk groups. We have identified other workers who should be covered, but we have had difficulty in getting employers to agree to expand the groups to include them.
Our final point in the bargaining agenda concerns people who agree to accept compensation in a full and final settlement, even though it might be less than they would get if they went to an employment tribunal. We want to ensure that they can come back and say that job evaluation and other aspects have identified other areas of pay difference for which they should be compensated. We cannot be tied to an agreement that would sign away a person's ability to make another legitimate and reasonable claim. That will be another future cost for councils. That is the challenge that we have faced in trying to reach agreement on a Scottish framework.
- The Convener:
That clarification is useful. I will put to you my understanding of the position. As a committee, we have been faced with the employers' range of estimated costs for dealing with the compensation elements, which deal with the retrospective consequences of failing to agree and implement single status agreements and job evaluation schemes across Scotland. Again, if I understand you correctly, we are also faced with the situation that only one authority has implemented a job evaluation scheme. Thirty-one authorities have not implemented schemes, which gives rise to additional compensation costs. In that context, is it more urgent to achieve rapid agreement on single status agreements and job evaluation schemes across all the councils in order to address the problem, rather than to deal only with the consequences of not doing so, which is the thrust of COSLA's view?
- Alex McLuckie:
The answer is not as straightforward as that, although we sometimes wish that life was that straightforward. When the single status agreement was introduced in 1999, it was not about equal pay, which is an issue irrespective of the single status agreement. The purpose of the single status agreement was to remove the barriers between the blue collar, or manual, workers agreement and the administrative, professional, technical and clerical staff agreement, which were fondly known respectively as "the green book" and "the blue book". The intention was to bring everybody in local government under the same conditions of employment. Part of that was to have a job evaluation scheme.
We were operating in a different world at that time, however, because there was compulsory competitive tendering. Several of the manual functions—construction, the direct labour organisations, refuse collection, grounds maintenance, catering and cleaning—were subject to compulsory competitive tendering. Different things were happening in 1999.
Between 1999 and now, pay inequality has crept into the system. As part of their agreed terms and conditions of employment—the green book—the manual workers had a job evaluation scheme, so they underwent a form of grading of their job titles and functions. Pay inequality has crept into those functions. We already have a measure that says that a woman who is grade 1 is being paid differently to a man on grade 1, so we can currently identify pay inequality. We need to deal with that and we cannot afford to wait until a job evaluation scheme is implemented fully. We must deal now with the clear cases of pay inequality that we know about. Carol Judge is correct that we ensure, when we deal with such cases, that if a case is signed off through a compromise agreement, that agreement takes us up to a certain date so that we do not remove our members' right to make future pay inequality claims if they so wish. We hope that, by the time the end date of a compromise agreement is reached, the job evaluation scheme will be in place and we will be able to deal with any other matters that arise from such cases. We know that there is pay inequality now and we need to deal with it now.
- Mr McAveety:
Do the unions bear any responsibility for the financial dilemma that faces local government on equal pay?
- Alex McLuckie:
No. Pay inequality and compensation for it are the employers' responsibility. I cannot speak for Jim Farrelly and Carol Judge, but it annoys me that councils that have been told constantly that they had to address pay inequality have, for whatever reason, not done so.
- Mr McAveety:
What possible reasons could there be for not addressing pay inequality over seven years?
- Alex McLuckie:
I do not know. You need to ask the employers.
- Mr McAveety:
We have tried to do that, which is why I wonder what you think.
- Alex McLuckie:
The reason could be cost. The councils told us in negotiations that implementation of a job evaluation scheme would increase the pay bill by a ball-park figure of 6 per cent to 10 per cent. It is not for me to say that that is why they did not address pay inequality, but one of the reasons why there was resistance could have been the cost of the wages bill.
- Carol A Judge:
The picture that I have built up since I took over the local government negotiations on behalf of Unison is one in which recognition of local authorities' legal responsibilities and the introduction of equal pay in local government will have dramatic effects. Our lay activists and our members are concerned that, to be realistic, the introduction of equal pay will mean massive reorganisation and, potentially, job cuts within local government. When I took over that responsibility, I was briefed that such discussions were taking place locally. Employers had recognised that they had a legal responsibility to introduce equal pay and that that would involve a huge cost, which would be incurred to the detriment of the services that the employers run. If you are looking for a view, I think that that might have contributed to some of the delays that are being faced.
Another factor is the magnitude of the task. Job evaluation and equal pay are not new issues, but the scale of the arrangements that must be introduced, the size of the employers, the experience that is required and the technical costs of introduction are huge. That task could not be undertaken lightly. I am not sure whether, when it embarked on the process, local government appreciated the full costs for which it would have to budget. In addition to the implementation cost, there is the outcome of introducing the arrangements and the continuing costs.
I will respond to the question that Alex McLuckie answered. Regardless of the phase of implementing equal pay that an employer is at, the cost will exist. Local government will have to meet the costs, whether the 31 councils are ready to run today or tomorrow with introducing a single status agreement with job evaluation and, therefore, with a deal that includes a compensation element for back pay. The costs will not go away; they will have to be addressed. The longer we take to implement the agreement, the higher the costs are likely to be. That is why we are keen to raise with the committee the urgent need to assist local government in meeting its legal liabilities.
- Jimmy Farrelly:
How we have engaged with employers is another issue. We have long criticised the culture of engagement in local government. For example, the Executive has encouraged more working together with the health service and there is a world of difference in how we engage with employers in the health service. The staff governance arrangements that apply in the health service show how engagement between employers and trade unions should be in a modern environment.
Unfortunately, such engagement has never worked its way into local government. In effect, there is a more traditional way of doing things, so the problem is that there has never been proper sharing of information locally, which would give our members and activists the confidence to know that they have had a fair crack at formal engagement. I have no doubt that that has contributed to suspicion among many trade unionists that there is a significant agenda, whenever they have sat down to discuss how to make progress. The lack of real intent or integrity in negotiating from the other party has contributed to that. I argue that we have said consistently that we want to improve that dialogue. We said at a forum that arrangements need to be improved and modernised. Unfortunately, that has not happened, so we are where we are today.
- Mr McAveety:
Can you name any other employer or group of employers that has taken such a length of time, shown such a lack of clarity and been in such a desperate situation? In your dealings as negotiators, have you encountered an equivalent situation?
- Carol A Judge:
I have covered several parts of the public and private sectors on behalf of Unison and I cannot think of an equivalent situation.
- Alex McLuckie:
To be fair, the health service springs to mind, funnily enough. We have been talking about agenda for change for a couple of years, but it has not been implemented. Equal-pay back payments for health service workers could raise issues. There is much to be said for agenda for change—it is a national scheme and how it is being dealt with hits more of the right spots for us—but an issue will still need to be addressed.
- Mr McAveety:
It took only a few meetings on a boat at Yalta to carve up post-war Europe, but the developments that we are discussing are already seven years in. Can you bring any Churchillian, Rooseveltian or even Stalinesque skills to the debate? I ask Alex McLuckie to give us his natural judgment. Who would you prefer? As you are from Ayrshire, I have a good idea.
The papers from the unions raise the concern that, if we are to face the reality of equal pay, there will be potential costs and consequences for the workforce. All the submissions from the unions have had at least a paragraph saying that they are concerned that some local authorities may use equal pay as an opportunity to change people's contracts and to introduce substantial changes to their terms of employment. Do you have any strong grounds for that, other than the observation that there is a major funding gap?
- Carol A Judge:
The feedback that I get from our full-time officers who deal with employers is that they say that they have to explore that option. That is anecdotal evidence, but it comes from more than one local authority. I cannot give chapter and verse on that, as it would not be appropriate to do so, but that is the scenario that local authorities might have to consider. Our senior lay activists also say that the option is being discussed locally.
- Mr McAveety:
If a local authority began
"sacking all staff and re-engaging them on lower pay and terms and conditions",
as one of the submissions suggests, what would be the unions' reaction?
- Carol A Judge:
Untold. We are talking about the future of local government and the need for a workforce that is fit for purpose and that can meet the needs that the Executive seeks in relation to efficiencies, the modernisation programme and other changes. We value our members, as I am sure you value the staff who are employed on your behalf in local government, so we must remunerate them properly. To tell them that one available option is to dismiss and re-engage them on different terms and conditions so that costs can be met would be the type of scenario that is normally seen in the worst elements of the private sector. That is not what we expect in the public sector. As such, I anticipate that the reaction would be untold.
- Dr Murray:
The Unison submission states that the employers' estimate of a cost of £560 million for equal pay is not realistic. I presume that you think that it will cost more than that because of knock-on effects; for example, if what we might call the lower-risk groups compare themselves through single status and make equal pay claims. How much do you think it could cost?
- Carol A Judge:
All that we have is a reaction to that figure; we do not yet have sufficient financial intelligence to give a specific figure. The employers have not taken on board the future costs from the introduction of equal pay as a result of job evaluation. Most of the financial information that the committee has from the employers is about the estimated liability from back-pay, but there will be future costs. I am uncomfortable with the figure, because I do not believe that it is realistic. In meetings with the employers, we have said that they have perhaps underestimated the amount. I do not want to be drawn into giving a specific sum, because we do not have sufficient intelligence on the matter.
- Dr Murray:
How much of the eventual sum should be contributed by the Scottish Executive? Should the Executive foot the entire bill, or should other players foot part of it?
- Carol A Judge:
It would not be right for me to tell you how much the Executive should put aside. We seek a way forward so that we can close off the issue and make progress on the staff who are employed in local government so that, 35 years after the legislation was introduced, we can say that a huge part of the public sector in Scotland meets its legal obligations on equal pay. That is long overdue. Therefore, there is a responsibility to encourage that to happen and to meet legal obligations. We share the frustration about having to come to you on that basis.
We hope that as much as can be realistically afforded and as much assistance as possible will be given to meet this need. We would like the total payment to be made, even it is a combination of moneys that are vired from various other budgets. At some point, the cost will have to be met. If we cannot achieve equal pay through a bargaining process, our members expect us to take the matter through the legal process of employment tribunals. That is not our preferred option because it is more costly and will not necessarily result in the best outcome for the whole workforce or authorities.
- Dr Murray:
A sum of £560 million or more will mean cuts and job losses elsewhere in the Scottish Executive's portfolio. It will be more of a trade-off in that case.
Last week, I met my local authority, which was keen to give me its perspective. It claimed that it wants to settle the matter, but there is considerable pressure on the trade unions because they are concerned that no-win, no-fee solicitors will take them to court. In such a scenario, would the individual regional organisers be personally responsible? Is the fear of being sued a problem for the trade unions in bringing the negotiations to completion?
- Carol A Judge:
That is not an issue for our full-time officers because they cannot be individually sued. It is the union that could be sued.
- Dr Murray:
Like the councils, can the unions be held corporately responsible?
- Carol A Judge:
Technically yes; that is the legal advice that we have been given.
- Dr Murray:
What would be the consequences of such actions occurring? Would the unions cease to function?
- Carol A Judge:
No, we would carry on. We simply want to ensure that our members get from us what they are entitled to, which is the best possible advice, direction and representation, as well as our resolving at its root a problem with their employers.
- Dr Murray:
The employers to whom I have spoken want to settle the matter while the trade unions are dragging their feet. The employers believe that they are doing so because the unions are concerned that they will end up in severe financial positions if a settlement is challenged by a no-win, no-fee solicitor.
- Carol A Judge:
Without getting too entrenched in what individual authorities have stated, if one puts many caveats on an offer, then it is difficult for us to recommend exceptions to it. Some caveats are hindering the settling of local arrangements. We prefer to address equal pay in its totality—not just one element of it. I accept that it is taking up a large amount of time, resources and energy and that no one will be a winner as a result of the time that has been taken to resolve the matter. I hope that today's meeting addresses the frustration and the anxiety that exists for our members, the employees, those who represent them and the councils.
- Dr Murray:
To ensure union members can settle their claims, are regional organisers encouraged to agree local settlements with the councils?
- Jimmy Farrelly:
Dr Murray has suggested that the unions are caught like a rabbit in a headlight and are fearful of being sued over settlements. Although we live in a litigious society, the unions are negotiators, not lawyers. We negotiate with employers and advise our members. Our purpose is to support and to represent the interests of working people. We are not fearful of being sued by no-win, no-fee solicitors: we are determined to negotiate a settlement that will protect people's jobs and employment conditions, deliver equality and recognise that the issue of past discrimination must be dealt with fairly and consistently.
It will up to individuals to determine whether they accept the deals that are offered by employers. The unions cannot collectively accept a deal, because that it is not our function and we are not entitled to do so. We have engaged with employers on settlement of a whole package.
- Alex McLuckie:
It is fair to say that it is business as usual for the GMB. Jimmy Farrelly is right: we are negotiators who involve ourselves in collective bargaining, and we are trying to resolve this issue through collective bargaining. The fact that there are no-win, no-fee solicitors involved makes life a bit interesting—it certainly changes the dynamics of collective bargaining as we know it. Like Carol Judge, I am unsure about the local authority that you mention, but I suggest that if a local organiser from the GMB has rejected a deal, that is because it falls far short of what our member could expect if we were to litigate through an employment tribunal.
Our role in collective bargaining negotiations is to deal with the existing inequality, but our agenda is a bit wider than that. There is also the issue of job security and any consequences for our members' current terms and conditions of employment. People might say, "Ach, that's just an excuse," but if you ask people who have transferred to the private sector as a result of compulsory competitive tendering what has happened to their contracts and their terms and conditions of employment, they will tell you that they have been reduced and are far worse than before they transferred.
People tend to forget that, in terms of the best value review, voluntary competitive tendering and all the rest of it, we do not have the protection that exists under a public-private partnership scheme, for example. There is a protocol on PPPs between the Scottish Trades Union Congress and the Executive that protects terms and conditions. We do not have that under the Local Government in Scotland Act 2003. We are discussing a similar arrangement, but it is not there yet. The City of Edinburgh Council has amended its proposals to say, "Let's see how many services we can privatise to remove this threat." Equality is a good issue, but continuing terms and conditions of employment are also important, as is the rate for the job in the future. In talking about doing away with pay inequality, we are getting hung up on the five years of back pay. If we get the job evaluation scheme right and women who suffer inequality are put in the correct pay band, we are talking about their pay for the next 10, 15 or 20-plus years. That is a big issue for us. It is not only about the retrospective element, although that is important and will be dealt with through collective bargaining.
We will be honest with our members. If a proposal is 30 per cent of what they could get through a tribunal but there are good, justified reasons for that, we will sign up for that. If it is 60 per cent of what they could get through a tribunal but there are no justified reasons for that and we think that it is not a good deal, we will reject it, depending on the circumstances. That is how our negotiations work, and that will happen irrespective of any third-party influence on us.
- Mr Arbuckle:
Where do you see the benefit for the taxpayer in this £0.5 billion-plus? You are asking the taxpayer to foot the bill, whether it is the council tax payer or the income tax payer.
- Alex McLuckie:
It will benefit the taxpayer if we can settle the matter through local negotiations and if we sign off a compromise agreement. What we would be compromising is what legal claims our members might have. If we have the funds to conduct local negotiations and to produce local proposals that are acceptable to the vast majority of members, that will be a far cheaper option than our not having the money and councils saying that they cannot afford local agreements. If that were to happen, we would go to an employment tribunal and the cost to the taxpayer would be far higher, believe me.
- Carol A Judge:
As a taxpayer, the benefit for me would be that there would still be a local government workforce that was fit for purpose and properly recognised. The home carer who comes to visit my mum three times a day would be recognised as a quality worker and would be paid a proper salary to continue their essential work. As a taxpayer, I would rather that someone was paid properly to do that important job.
- Mr Arbuckle:
When the single status agreement was first proposed, it was supposed to be cost neutral, but its cost has drifted to more than £0.5 billion. Is that a sign of the unions' success or of the employers' failure?
- Carol A Judge:
As we have said, to begin the process believing that it could be cost neutral was not the right starting point. That could not possibly have been the case. It should have been recognised that costs would be involved. As we have explained in our submission, those costs would have been different at the outset because of the changes that there have been in how much back pay people expect to be able to get. Any significant change in a workforce's terms and conditions will have cost implications that it will be challenging to meet. The implications of the single status agreement are narrowing because there is an urgent need to address the issue. The longer it takes to implement equal pay, the bigger the problem will grow.
- The Convener:
I have two final questions. First, should the current arrangements that allow no-win, no-fee solicitors to intervene in such cases be given some legislative attention?
- Carol A Judge:
We will take that question away and consider it. Over the past six or seven months, those arrangements have hindered our ability to progress and have derailed the successful efforts that we and the employers had been making to complete the single status and job evaluation process. We have had to be taken off that to concentrate on other work. The effect on the workforce and on industrial relations generally at local level has been extremely debilitating.
Although we have been hindered by the intervention of no-win, no-fee solicitors, workers have the right to get representation in whatever way they wish. I would not want them to be denied that right, but I would like us to review how the current arrangements have hindered us.
- The Convener:
Secondly, I presume that the fee arrangement allows people who act as representatives to make significant amounts of money out of compensatory payments. Is such an arrangement reasonable?
- Jimmy Farrelly:
There is a general issue. Members come to us on a range of issues and there is a tendency for people to seek the advice of a solicitor. They want to get a lawyer involved automatically. We are negotiators—our primary function is to negotiate the best deal that we can with employers. We cannot interfere with the law. People can set up as solicitors and take advantage of situations such as the one that has arisen. The involvement of such people has not helped us to negotiate. If we have to litigate on behalf of our members, we have no choice. We have to give people the proper legal advice and we do that as a matter of course. There is a perception that, if people go to a no-win, no-fee solicitor, they will get better advice and come out with a better result, but no-win, no-fee solicitors have an obvious agenda. They are out to make money from the process.
- The Convener:
Perhaps it is unfair to ask for an instant response, but the committee would welcome a written response on the issues that arise from how no-win, no-fee firms operate. Do you think that the arrangements for representation by such firms at tribunals are positive or negative, reasonable or unreasonable? It would be useful if you could provide a second written submission on that.
My final question is for Carol Judge. Unison Scotland's submission states:
"the current equal pay liability is 250% larger than could have been forecast by the most detailed analysis in 1999 and this increase in liability is attributable to the failure of the UK Government to legislate on equal pay in compliance with the provisions of community law prior to July 2003."
I put it to you that, if the unions and the employers had reached an agreement by the original target of April 2002, the liability would have been significantly less. The blame is to be spread around. I do not think that the unions' failure to reach agreement with the employers can be ignored.
- Carol A Judge:
It is realistic to recognise that the costs would have been lower if the single status agreement had been implemented earlier because it would have been implemented before the change in the duration of back pay from two years to five years. Case law changes constantly, but perhaps—
- The Convener:
If you had reached agreement in 2002, as was originally projected, compensation would have been claimed for two years as opposed to five years.
- Carol A Judge:
That is correct.
- The Convener:
Thank you for coming along and for your evidence. We will hear evidence from the minister on 21 February.